With:  Sam Lynton-Brown, CFA,  Head of Global Developed Markets Strategy Alex Jekov, G10 FX Strategist BNP Paribas | Global Markets (Recorded 7 June  2022)  The USD’s failure to weaken following Fed lift-off reflects the high level of uncertainty around inflation and the fed funds path, causing high volatility in rate expectations, we argue.  The spillover from higher rates vol to FX vol has made FX carry trades less attractive, in turn preventing high beta currencies from strengthening.  We think the Fed cycle is now fairly priced. Rates vol and, in turn, FX vol may be peaking, which suggests to us that the next leg in the USD is likely to be down as investors initiate carry trades.     For more information, please refer to https://markets360.bnpparibas.com   For country-specific disclaimers and legal notices, please refer to https://globalmarkets.bnpparibas.com/gm/home/Markets_360_Country_Specific_Notices.pdf